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AM Best Affirms Credit Ratings of Sun Life Financial Inc. and Its Subsidiaries
[January 28, 2022]

AM Best Affirms Credit Ratings of Sun Life Financial Inc. and Its Subsidiaries


AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "aa" (Superior) of Sun Life Assurance Company of Canada (Sun Life) (Ontario, Canada) and Sun Life and Health Insurance Company (U.S.) (Lansing, MI) - the core insurance subsidiaries of Sun Life Financial Inc. (SLF) (Ontario, Canada) [NYSE: SLF] (collectively referred to as Sun Life Group). Concurrently, AM Best has affirmed the Long-Term ICR of "a" (Excellent) and the existing Long-Term Issue Credit Ratings (Long-Term IR) of SLF.

Additionally, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of "a-" (Excellent) of Independence Life and Annuity Company (Independence) (Wilmington, DE), a strategic subsidiary of SLF. Lastly, AM Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of "bbb+" (Good) of Professional Insurance Company (Dallas, TX), an SLF run-off subsidiary. The outlook of these Credit Ratings (ratings) is stable. (Please see below for a detailed listing of the Long-Term IRs.)

The ratings of Sun Life Group reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).

Sun Life Group maintains a solid balance sheet position and well-diversified business profile with superior distribution capabilities and significantly reduced exposure to the low interest rate environment due to its focus on growing its asset management and group benefits businesses, as well as its non-life products in Asia. The group maintains a very strong level of risk-adjusted capitalization, as measured by Best's Capital Adequacy (BCAR), and strong liquidity throughout the organization with strong cash flows, moderate financial leverage, a liquid investment portfolio, and a significant amount of cash and short-term investments at the holding company as an additional buffer. The balance sheet also continues to be bolstered by favorable earnings in its core segments while continuing to grow overall revenue despite the negative impacts from the COVID-19 pandemic.

While Sun Life Group has focused on reducing volatility within the liability structure of its product offerings, its earnings remain moderately exposed to equity market volatility and changes in interest rates, as well as fluctuations in foreign currencies. The companies' wealth management segment continues to bolster the group's assets under management during this time. Nonetheless, the group's earnings remain susceptible to an increased level of volatility within the financial markets. Sun Life Group also conducts an extensive array of sensitivity and stress testing beyond what is required by regulators including impacts on earnings, regulatory capital and liquidity, which provides protection to the group's global risk profile.

The ratings ofIndependence reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, very limited business profile and very strong ERM. The company's strategic importance to Sun Life Group has increased recently as it began writing stop-loss insurance in 2020 as part of Sun Life's Fullscope RMS business. AM Best believes that Independence will benefit from its parent company's significant experience in the stop-loss insurance market and synergies from its turnkey administrative platform.



The ratings of Professional Insurance Company reflect its balance sheet strength, which AM Best assesses as strongest, as well as its marginal operating performance, very limited business profile and very strong ERM.

The following Long-Term IRs have been affirmed with stable outlooks:


Sun Life Financial Inc.-

--"a-" (Excellent) on CAD 400 million 2.75% subordinated debentures, due 2027

--"a-" (Excellent) on CAD 1,000 billion 3.05% subordinated debentures, due 2028

--"a-" (Excellent) on CAD 750 million 2.38% subordinated debentures, due 2029

--"a-" (Excellent) on CAD 1,000 billion 2.58% subordinated debentures, due 2032

--"a-" (Excellent) on CAD 750 million 2.06% subordinated debentures, due 2035

--"a-" (Excellent) on CAD 400 million 5.40% subordinated debentures, due 2042

--"bbb+" (Good) on CAD 250 million 4.45% Class A non-cumulative preferred shares, Series 3

--"bbb+" (Good) on CAD 300 million 4.45% Class A non-cumulative preferred shares, Series 4

--"bbb+" (Good) on CAD 250 million 4.50% Class A non-cumulative preferred shares, Series 5

--"bbb+" (Good) on CAD 155 million 1.825% Class A non-cumulative preferred shares, Series 8R

--"bbb+" (Good) on CAD 125 million floating rate Class A non-cumulative preferred shares, Series 9QR

--"bbb+" (Good) on CAD 173 million 2.842% Class A non-cumulative preferred shares, Series 10R (CAD 171 million outstanding at 2.967%)

--"bbb+" (Good) on CAD 27 million floating rate Class A non-cumulative preferred shares, Series 11QR (CAD 29 million outstanding)

The following Long-Term IRs have been affirmed with stable outlooks:

Sun Life Assurance Company of Canada-

--"a+" (Excellent) on CAD 150 million 6.30% subordinated debentures, Series 2, due 2028 (originally issued by Clarica Life Insurance Company)

Sun Life Capital Trust-

-- "a" (Excellent) on CAD 200 million 7.09% non-cumulative Sun Life ExchangEable Capital Securities, call date 2032

The following indicative Long-Term IRs have been affirmed with stable outlooks:

Sun Life Financial Inc.-

-- "a" (Excellent) on senior unsecured debt

-- "a-" (Excellent) on subordinated debt

-- "bbb+" (Good) on preferred shares

This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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